A milestones was passed in the Saudi financial market at the end of August, when Dr. Ibrahim Al-Assaf, the country’s minister of finance and national economy, announced that the Gulf International Bank would officially be permitted to open a branch in Saudi Arabia in September. It will be the first Gulf financial institution to do so.

Quoted in Gulf News,Al-Assaf did point out that Gulf International Bank, was allowed to operate in the Saudi market much before the official opening because it was owned by the Gulf countries, including Saudi Arabia.

Saudi Arabia, in fact, holds the biggest stake in the bank, which has already opened its branch in Bahrain. Al-Assaf said that he hoped the local branch would promote competition among all Saudi Arabia’s banks.

But others in the Saudi Arabian banking sector are not convinced about the wisdom of this move. Abdullah Abu Alsamh, the director of AlBank AlSaudi AlFaransi, told Gulf News that the Saudi banks are capable of meeting the country’s financial needs on their own.

The number of Saudi banks has recently been reduced from 11 to 9 as the result of a number of high-profile mergers.

Abu Alsamh does not believe that the Gulf and international banking institutions should be able to enter the Saudi market, without restrictions placed on their activities. He said that the assumption that foreign banks provide finances on easier terms than that of their local counterparts was not true.

However, others in the banking sector were more pleased by this latest development. Talal Ibrahim Al-Gosaibi, executive president of Riyhad Bank, told Gulf News that the opening the banking sector to Gulf financial institutions was an important transitional step toward meeting the challenges of globalization.

Hani Zamil, senior marketing manager of Al-Jazeera Bank, concurred. The opening of the first Gulf bank in Saudi Arabia was a good beginning, he said, adding that since most banks offer their services through the Internet their physical location is becoming less consequential. – (Albawaba-MEBG)